US jobless claims edge lower but are still worse than expected at 1.51 million

Agricultural workers from Bud Farms harvest celery in Oxnard, California. Some 1.51 million new jobless benefit claims were filed last week, the US Labour Department said on Thursday. AFP

Applications for unemployment benefits in the US fell less than forecast last week, showing only gradual improvement from the worst of the pandemic-related layoffs even as states re-open more of their economies.

Initial jobless claims for regular state programs totaled 1.51 million in the week ended June 13, down slightly from an upwardly revised 1.57 million in the prior week, Labour Department figures showed Thursday.

Applications have exceeded a once-unthinkable 1 million on a weekly basis since mid-March. The median estimate in a Bloomberg survey of economists called for 1.29 million initial claims in the latest week.

Continuing claims – the total number of Americans claiming ongoing unemployment benefits in state programmes – decreased to 20.5 million in the week ended June 6, compared with a median projection of 19.9 million. Those figures are reported with a one-week lag.

Given the unprecedented surge of claims in recent months, many economists look to the non-seasonally adjusted figures for a more accurate read on claims.

Unadjusted continuing claims actually climbed by almost 26,000 to 18.7 million. Unadjusted initial claims dropped by more than 128,000 last week, compared with the seasonally adjusted 58,000 decline.

By several metrics, the economy has rebounded at a faster pace than many anticipated. Payrolls at companies increased by several million in May and consumer spending on cars, restaurant meals and more soared last month, exceeding expectations as states loosened restrictions.

But the jobless claims data remain a glaring blemish that shows churn and volatility in a labor market that entered the year in solid shape.

Federal Reserve chairman Jerome Powell underscored this dichotomy to lawmakers Tuesday when he said, “We would expect to see large numbers of people during this period coming back to work during this second period – call it the bounce back or the beginning of the recovery”.

“Then we think, and I think most if not all forecasters think, that will leave us well short of where we were in February.”